Though B Division still lacked an agent-running section, Harker had a three-man Observation section (B4), responsible for shadowing suspects and making ‘confidential’ inquiries.70 Its head, John Ottaway MBE, had joined MI5 in 1920 after twenty-nine years in the City of London Police (eleven as detective superintendent). The recreations listed by Ottaway on joining indicated that he came from lower down the social scale than most other officers: cricket and tennis rather than hunting and field sports.71 Admiral Sinclair had told the Secret Service Committee in 1925 that Kell’s inability to run directly more than ‘informants’ obliged SIS to run agents inside the United Kingdom as well as abroad. In December 1929 Desmond Morton recruited Maxwell Knight and his agents to work for SIS. He reported to Sinclair:
[Knight] makes an excellent impression, is clearly perfectly honest, and at need prepared to do anything, but is at the same time not wild. When required by his previous masters, he and two friends burgled, three nights running, the premises of the local committee of the Communist Party in Scotland, the branch of the Labour Research Department there and the Y[oung] C[ommunist] L[eague] HQ.
With Sinclair’s approval, Morton despatched Knight around Britain to investigate Communist and other subversive organizations,72 chiefly to uncover their links with Comintern. Morton reported that ‘with every passing month [Knight] got his agents nearer to the target area.’73
Doubtless aware that MI5, as well as the Special Branch, would believe that SIS was trespassing on its territory, Morton advised Sinclair that Kell and William Phillips should not be informed about Knight’s investigations. By the summer of 1930, however, both the Special Branch and MI5 had discovered what SIS was up to. Colonel J. F. C. Carter of SS1 (the Special Branch section which dealt with Communist subversion) told Morton that he had Knight ‘under observation’; Knight noticed the surveillance and suspected that Carter, a wartime MI5 officer (‘recreations: polo, big game shooting’) had also told Phillips: ‘Colonel C[arter] then attempted to frighten M[axwell] K[night] off doing this work for Major Morton or anybody else, by suggesting that he could make his life and that of his agents a misery.’ The Secret Service Committee was revived in April 1931 to ‘discuss the difficulties that had arisen in the inter-relation between C’s organisation and Scotland Yard’.74
Scotland Yard’s position, however, had been fatally compromised by MI5’s dramatic discovery that the Special Branch had itself been penetrated by Soviet intelligence. Though there were no prosecutions, two officers were dismissed from Scotland Yard in 1929 after a disciplinary board of inquiry.75 At a meeting of the Secret Service Committee on 22 June 1931, Sir John Anderson, PUS at the Home Office, proposed that SS1 and its responsibilities should be transferred to Kell:
MI5 was already responsible for counter espionage not only for the fighting services but for all government departments, and . . . this was a logical extension of its duties. There would thus be only two organisations dealing with secret service work, C covering foreign countries, and MI5 the Empire.76
The proposal was accepted. It was agreed that SIS should confine itself to operations at least 3 miles away from British territory, and that the domestic agencies should operate only within this limit. On 15 October the lead role in countering Communist ‘subversion’ was also moved from the Special Branch to MI5 (henceforth officially known as the Security Service), which acquired Scotland Yard’s leading experts on subversion. Scotland Yard had defined subversion somewhat more broadly than MI5 and the integration of the two sets of files therefore took some time. The head of A Branch, William Phillips, noted that a number of the categories in SS1 files were not of interest to the Security Service. Some of those in the SS1 files were, in his view, mere ‘Hot Air Merchants’. He also disagreed with keeping files on Scottish nationalists who, in his view, were currently ‘a perfectly sound constitutional movement, aiming at a strictly limited autonomy, similar to Northern Ireland’. Nor did Phillips think it legitimate to open files, as Scotland Yard had done, on atheists, unemployed marchers, mutinous members of the merchant navy, pacifists or policemen who had received adverse reports.77
If the Prime Minister, Ramsay MacDonald, was informed of the change to the Security Service’s role in October 1931, he must have been told informally since there is no written record of a briefing in any Whitehall file.78 The Security Service ceased to be a section of the War Office and acquired an enhanced but ill-defined status within Whitehall as an interdepartmental intelligence service working for the Home, Foreign, Dominion and Colonial Offices, the service departments, the Committee of Imperial Defence, the Attorney General, the Director of Public Prosecutions and chief officers of police at home and throughout the Empire.79 For at least two years there was some confusion about the 1931 reorganization, stemming partly from the fact that the Security Service was still also known by its old title, MI5, thus appearing to imply that it was still a department of military intelligence (MI). Holt-Wilson noted in 1933 that the War Office Directorate of Military Intelligence was ‘only aware in a vague way’ of what had happened two years earlier, and that even MI5 had no accurate written record of the changes. He therefore drew up a memorandum ‘to make it clear that the Security Service was no longer in any sense a part of the Directorate of Military Intelligence’.80
The transfer of SS1 from Scotland Yard brought the Security Service a small but important influx of able staff. The two most senior were Captains Hugh Miller and Guy Liddell. Despite his earlier career as an MI5 officer,81 Miller made less of an impression than Liddell. To younger staff in particular, he seemed an old-fashioned figure. Margot Huggins, who transferred from Scotland Yard at the same time, later recalled that ‘He always worked standing up at one of those Dickensian wooden desks with the lift up lid. Not government issue, of course.’82 Miller died after an accident in 1934. His obituary in The Times described him as ‘one of Nature’s own gentlemen’. Though within a small circle of devoted friends he revealed ‘a never-failing and keen sense of humour’, ‘Captain Miller avoided society, and devoted his spare time to gardening and to the care of his valuable collection of Japanese prints.’83
Guy Liddell, who was Miller’s executor as well as a distant relative of Alice Liddell, the model for Lewis Carroll’s Alice in Wonderland, became deputy head of B Branch (counter-espionage and counter-subversion) under Harker (whom he succeeded as its wartime head). Before the First World War, Liddell had studied in France and Germany, and was fluent in both languages. But for the war, in which he won the Military Cross, he might well have become a professional cellist, and he remained a keen cello player throughout his life,84 arranging musical evenings at his flat in Sloane Street. Liddell was much more popular with staff than the sometimes irascible Harker, never raising his voice or losing his temper. His secretary for many years both at Scotland Yard and at the Security Service later remembered him as a kind, avuncular, ‘rather dumpy’, ‘most unsoldierly’ figure, despite his MC (of which he never spoke), with an astute mind and good sense of humour.85 Even Kim Philby later recalled Liddell with affection as ‘an ideal senior officer for a young man to learn from’:
He would murmur his thoughts aloud, as if groping his way towards the facts of a case, his face creased in a comfortable, innocent smile. But behind the façade of laziness, his subtle and reflective mind played over a storehouse of photographic memories.86
But Liddell’s private life was scarred by an increasingly unhappy marriage to the Honourable Calypso Baring, daughter of the Irish peer Lord Revelstoke, whom he had married in 1926. Had he been a less patient man, his colleague Dick White said later, ‘he must surely have strangled Calypso’. Calypso eventually left for California with their four children; the marriage was dissolved in 1943.87
Liddell was quick to recognize the talent of the Service’s Soviet expert, Jane Sissmore, whom he regarded as having ‘a rather privileged position as a court jester’.88 A colleague later recalled:
Jane Siss[more] was a lively soul. One neve
r knew what she would do next. I remember her in my room once, knocking on the door of Liddell’s inner sanctum and when told to come in dropping to her knees and shuffling in with hands pressed together in prayer to grant whatever request she had.89
Sissmore’s successor as the Security Service’s most influential woman in the 1940s and 1950s was to be the redoubtable Milicent Bagot, a classics graduate from Lady Margaret Hall, Oxford, who joined the Service from Scotland Yard as a twenty-four-year-old secretary in 1931 at the same time as Miller and Liddell (and is believed to be the model for John le Carré’s character Connie). Like Sissmore, Bagot was to become the Service’s leading expert in Soviet Communism and its allies, gradually acquiring an encyclopaedic knowledge which impressed even J. Edgar Hoover. Unlike Sissmore, Bagot was never in danger of being described as a ‘court jester’. She was a powerful personality who did not suffer fools or the ignorant gladly; some found her intimidating. Her main recreation was music; she habitually left the office promptly on Tuesdays to sing in a choir.90
With SIS now prohibited from running agents inside the United Kingdom, Maxwell Knight gave up his work for SIS and transferred to the Security Service in October 1931 at the same time as SS1 was transferred from Scotland Yard. His network, known as ‘M Section’, which he ran initially from a flat in Sloane Street,91 gave the Service an agent-running capacity which was crucial to its penetration of CPGB headquarters and, from 1933, of the British Union of Fascists. Knight later moved to a flat in Dolphin Square rented in the name of his second wife, Lois Coplestone, whom he married in 1937.92 In December 1933 Kell sent what Knight described as a ‘most handsome bonus’ with a ‘very encouraging message’. Knight replied:
I should like you to know how very happy I am working for the show, and also how very much I appreciate the marvellous way in which my small efforts are backed up by all concerned . . . I am heart and soul in the work (without I hope being a fanatic) and it is grand to be doing something which is really of use & which is so very pleasant at the same time.93
Knight, however, remained something of a law unto himself. He was probably the last Security Service officer who, as one who served under him later recalled, ‘would burgle premises without authority and recruit whomsoever he wished. But to his agents he was an almost mystical figure.’94
The most noticeable change in working conditions for most members of MI5 immediately after it became the Security Service was a pay cut, in line with the sweeping economies forced on Ramsay MacDonald’s National Government late in 1931 by the Great Depression. By 1934, however, Service salaries had been restored to their previous levels.95 Salaries (on which no income tax was charged until after the Second World War) were paid in cash. Officers were paid in what one member of the Registry remembers as ‘lovely, crisp white fivers’. Female staff ‘all queued up for our buff envelopes at the end of each month outside the office of a rather terrifying lady, Miss Di[ck]er [Lady Superintendent], and her equally terrifying assistant, Miss Constant, who wore a monocle.’96 Despite the intimidating nature of pay-day, most surviving recollections of life in the Service before the Second World War are positive. According to Catherine Morgan-Smith who joined the Service in 1933, retiring thirty years later as the last lady superintendent:
We were a small closely-knit group, friends among ourselves, keenly interested in our work and proud of it. Best of all, the courtesy and kindness engendered by Sir Vernon and ‘Holy Willy’ [Holt-Wilson] penetrated all levels of the Service and made it a happy place to work in.
. . . At Christmas Sir Vernon would sometimes take a part of the Office staff to the circus . . . At other times you might get a rather awe-inspiring invitation to dine with the Kells at Evelyn Gardens [in Chelsea, to which they had moved from Campden Hill]. When this happened to me Sir Vernon always gave me half-a-crown for a taxi home and I always took the bus and saved the half-crown which was good money in those days.97
One former member of staff was interviewed in 1937 for a job at MI5, first by Miss Dicker, then by Kell (‘a nice man’): ‘As far as I remember he only asked me two questions. Where I had been to school and did I play any games? Wycombe Abbey and Lacrosse satisfied him and he said “You’ll do” and I was in.’98 Kell’s criteria, however, were not limited to family background, school and sports. As in the earliest years of MI5 recruitment, he placed a premium on foreign-language skills.99
Kell’s management style was low key and paternalist. According to a former member of staff:
Working in the Office then was like being in a family firm, one felt secure . . . Sir Vernon Kell was a small quiet man rarely seen by us. He kept an eye on our behaviour though. When a young Officer, T. A. Robertson [later in charge of the wartime double agents], joined us in the early thirties he was told that he must not socialise with the girls. The Colonel [Kell] did not approve of familiarity between officers and staff. The officers were always known by their rank and surname and, of course, they called us Miss So-and-so. I worked for twelve years for Captain Liddell before he succumbed to the wartime habit of Christian names all round. In fact, the girls knew each other only by surname. I did not know the Christian names of most of my colleagues for years.100
Chief among those who broke the rule not to ‘socialise with the girls’ was Eric Holt-Wilson. On 10 September 1931 he sent an application form for a job in MI5 to a Miss Audrey Stirling, telling her: ‘I shall be pleased personally to endorse your application, and to try to secure you any suitable vacancy . . .’101 Holt-Wilson, then a fifty-six-year-old widower, set out to woo the impressionable Stirling, who was over thirty years younger, as well as to recruit her. Among the qualities which he drew immodestly to her attention was his bravery in the face of danger: ‘You must remember that I have often, so often, in my life been down the steps and gazed into the dark River of Death – face to face – does the thought frighten you my darling?’ Their love, Holy Willy assured Miss Stirling, was divinely blessed.102 They married not long afterwards. Overblown though Holt-Wilson’s romantic rhetoric was, the marriage was happy. In 1933 Audrey became Lady Holt-Wilson, when her husband was knighted in the King’s Birthday Honours List. She told Sir Eric on his retirement in 1940 that he was ‘my brave, wise, brilliant, belovedest darling’.103
From 1934 there was a modest increase in Service staff. MI5’s share of the Secret Vote, most of which was for salaries, rose from £25,000 in 1935–6 to £50,000 for 1938 and £93,000 for 1939–40.104 In the same year the Security Service moved from Cromwell Road to Thames House on Millbank, still a relatively new building. Sixty years later most of Thames House became the Security Service headquarters. In 1934, however, the Service occupied only the seventh floor and shared the lifts with commercial tenants of the building.105 At the end of 1938 the Security Service’s two branches were increased to four. A Branch continued to be responsible for administration and the Registry. B Branch dealt with counter-espionage and counter-subversion; Knight’s ‘M Section’ was incorporated into the Branch as B1F.3 A newly created C Branch vetted candidates for some sensitive posts in Whitehall and foreign-born candidates for commissions in the armed forces, but it had only one officer and no means of enforcing its decisions. D Branch, also newly established, oversaw protective security in munitions and aircraft factories, arsenals and dockyards, with a vaguer responsibility for railways and electricity supply. Its three officers were too few, however, to have much impact. For some years Handley Page, a major military aircraft manufacturer, had a German chief designer. All efforts to dislodge him were ignored until he was interned during the Second World War.106 The total number of Service officers increased from twenty-six in January 1938 to thirty a year later and thirty-six in July 1939. Secretarial and Registry staff grew from eighty-six in January 1938 to 103 in January 1939 and 133 in July 1939.107
The growing number of Security Service investigations, combined with greater use of the telephone by suspects, often speaking in foreign languages, put increasing strain on the General Post Office
resources for operating HOWs. Frederick Booth, who was employed by MI5 on ‘special censorship’ at the GPO, later recalled:
In 1934 the ‘checks’ on telephone lines were increasing rapidly and the only method of recording the conversation was by handwriting. The results were not accurate or useful and the written returns showed increasingly the remark ‘Conversation in a foreign language – not understood.’ Complaints were received and the matter was referred to the G.P.O. Engineering Department, but no solution was obtained.
Through an intermediary Booth began negotiations with the Dictaphone Company, which eventually provided a system for recording telephone conversations. He was congratulated personally by both Kell and the GPO Director General, Sir Thomas Gardner.108
The clear division of responsibility established between the Security Service and SIS in 1931 improved the working relations between them. As part of the 1931 reorganization, SIS established a new Section V (counterintelligence) under Valentine Vivian (later deputy chief of SIS), which liaised with MI5. According to a later internal MI5 history, the liaison worked well until the outbreak of the Second World War, due largely to ‘the goodwill and readiness for give and take between the officers concerned at all levels’ in both Services.109 From 1934 Section V shared with the Security Service decrypted Comintern radio messages which provided details of Moscow’s policy directives and secret subsidies to the British Communist Party.110
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